Pricing is essential to all businesses. If goods or services are priced too high, then too few will sell; if goods or services are priced too low, then the business may fail for lack of profits. In some businesses, pricing is relatively simple. For example, in a grocery store each individual item may be sold a set price and the price of all items an individual wishes to purchase are added together to determine the final cost of an individual's purchase. However, in other businesses, pricing is more complex. For example, in some businesses a quote or pricing estimate combining many goods and/or services varying in price and from different suppliers must first be given to a potential customer before the customer agrees to enter into a business transaction. The construction business is an example of a business that may frequently need to provide estimates although one can appreciate that many other businesses operate with a similar procedure.
The process of providing a price estimate involves the need to combine the prices of many different goods and/or services and offer a competitive price, while maintaining an acceptable profit margin. During the estimation process, goods frequently change prices so the person making the estimate may not be in possession of up-to-date pricing.